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Dear Editor: Oil and gas is “a waste of the future generation’s patrimony”

“This notion that ‘we have oil’ is a gross misrepresentation of what it cost to get a bbl of oil out of the ground to the point of sale—not to mention that the price you see quoted via international media is not what our oil sells for…”

The following Letter to the Editor on the Petrotrin dilemma was submitted to Wired868 by oil and gas management consultant, Antonio D Ross:

Photo: Falling oil prices…
(Copyright CommodityOnline)

Petrotrin is an IOC (Integrated Oil Company) whose main source of revenue is from oil produced and sold. To produce oil, you first have to find it (seismic, drill), produce it (production equipment and facilities), store it (pipelines, storage tanks), process it (separate the water from the oil) and then sell it to a refinery (more pipelines and tanks).

For the purpose of simplifying this discussion, I deliberately left out a few steps as well as the many steps within those steps listed in the processes (find, produce, store, process). This notion that “we have oil” is a gross misrepresentation of what it cost to get a bbl of oil out of the ground to the point of sale—not to mention that the price you see quoted via international media is not what our oil sells for.

To find, produce, store and process oil costs hundreds of millions of dollars. The truth is, those two balloon payments of (USD 850ml and 750 ml) is the least of Petrotrin’s—and, by extension, Trinidad and Tobago’s—worries.

Oil and gas is a high upfront cost business; hence the reason why multinational IOCs (BP, Shell, Exxon, etc) are sometimes the only ones willing and able to take on the high financial risk to access reserves (see Guyana as a recent example) that may sometimes turn out to be dry holes.

With those two balloon payments looming on the horizon, Petrotrin will not have access to capital to do what is necessary to increase its production and reserves in order to finance its international debt obligations as well as its obligations to you as a citizen to Trinidad and Tobago.

Photo: Prime Minister Dr Keith Rowley (right) and his wife Sharon during 2017 Independence Day celebrations.
(Copyright Office of the Prime Minister)

The current Petrotrin situation is one of high refinery and other equipment maintenance cost, high and escalating wage bill, large debts, operational inefficiencies, management inefficiencies and poor governance structure, and is a waste of the future generation’s patrimony.

I am 100% in agreement with the government on position of:

  1. Shutting down the refinery;
  2. Paying off all the workers and the associated accumulated financial liability;
  3. Restructuring the company with a rigid hiring process to maximise efficiency;
  4. Invest in finding more reserves to grow its production in order to maximise revenue.

I would support the government negotiating with any perspective buyer who would come forward and take on the refinery at a fair price (with no incentives).

We don’t have unlimited oil and gas in the ground so we must maximise the value while we can and look to a future of producing high value goods and people because that is our greatest asset.

Photo: Petrotrin oil refinery.
(Copyright Petrotrin.com)

 

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Letters to the Editor
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2 comments

  1. Selling Petrotrin is not the way to go. These are the mistakes of past governments after our founding father death. Caroni cocoa, tobacco, rum, pitch, the train, and all other resource that past government abandon because no one want to be responsible, so take the short way, full our pockets and give up all Eric William and the liberation movement fought for in the 1970s. All of these economic base of generating economy should be held and utilized with youth labor force and immigrants. We are running from being industrial and all our young talents and legal immigrants resort to crime.
    Fifty millions dollars each month are spent on taking care of prisoners who generates noting back to the economy. So many graduates from UWI seek jobs in their specialty where high seniors hold, and should be passing to their young leaders and retire. Our infrastructure are not being maintain but many cut resources still not shows accumulation of funds. Politician’s after three years in office should be entitle to show prove of their contribution to their constituency in the form of some construction site for the use of the citizens. We need that patriotism and responsibility from MP and the rest.
    Agencies are crumpling with over paid staff and unsatisfied clients. For instant what is the cost of a long awaited passport that if you’re refuse don’t get a reimbursement, and the ministry of immigration see this as normal, no care for the citizens of the country. The lack of standards that not applied to seeking government agency help – you fill an application out and approach the clerk window, who then tells you to go the other window, and while waiting someone step in front of you from no where and get full service. Or, the sale of item base prize, fluctuate in the same area to great escalation. Lets set standards and those in charge being responsible.